Chairman’s Report

On behalf of the Board of Directors, it gives me great pleasure to present the Annual Report for Commercialbank for the year ended 31 December 2009.

2009 was a very challenging year for global financial markets but Commercialbank has delivered a resilient set of full year results despite the effects of the global financial downturn. The strength of our regional franchise has enabled Commercialbank to absorb the challenges of the last year and re-align the business so that it is well positioned to capture the potential value that recovering markets will offer.

The banking sector received strong oversight and support from the Government and the Qatar Central Bank throughout 2009. The Government provided three main measures of support to the Qatari banks during the year.  This support included two separate capital injections from the Qatar Investment Authority, and asset swaps of the banks’ local equity portfolios and a part of their real estate and other exposures in return for a combination of cash and government bonds.  These measures ensured that the banks were well capitalized and had adequate levels of liquidity throughout the year.  On this occasion I would like to express our gratitude for the wise and pro-active leadership that we have received from the Government and from the Qatar Central Bank throughout the global financial downturn.

Commercialbank delivered a net profit of QR 1,524 million in 2009, the second highest profit in the Bank’s history. The Bank remains strongly capitalized and in recognition of our loyal shareholders’ commitment and the Bank’s resilient performance, the Board of Directors is proposing a cash dividend of 60%, QR 6 per share, for 2009.

We have worked closely with our associate Banks, National Bank of Oman (NBO) and United Arab Bank (UAB), to deliver an increasing level of alignment in product offerings, operational excellence and cost synergies as part of the Bank’s regional alliance strategy. 2009 saw the adoption of Commercialbank’s Sadara proposition at both NBO and UAB; the extension of the Bank’s Islamic offering to UAB; and the roll-out of an operational excellence programme alliance-wide to improve customer service and enhance back-office efficiency.

Whilst NBO made a solid contribution, at a reduced level, and UAB delivered a record net profit, together they contributed in excess of 10% to the Group’s net profit in 2009.

In November the Bank successfully concluded a global bond programme which demonstrated the strength of Commercialbank’s brand across global capital markets as it issued US$ 600 million of subordinated debt in the region’s first Regulation S/144A transaction and simultaneously issued US$ 1 billion in senior debt; the issues were substantially over-subscribed by investors.

Commercialbank has been an integral player in the development of Qatar for more than 34 years and is highly committed to its role in supporting the community. Inspired by Qatar, I believe that the Bank can look forward to continued growth in the years ahead as regional markets recover from the effects of the past eighteen months and as the Qatari economy continues to be developed under the wise leadership of this country.

The global economy is in the process of returning to positive growth and we expect to see the rate of recovery continue into 2010 with major infrastructure projects and developments in Qatar and across the region helping to drive that recovery process. Downside risk remains, but the combination of our controlled and prudent expansion policy, conducted within the framework of our rigorous risk assessment will enable us to manage any such risk.

In conclusion, and on behalf of the board of Directors, I would like to express our sincere appreciation for the guidance and support received from His Highness the Emir, His Highness the Heir Apparent, His Highness the Prime Minister, His Excellency the Minister of Finance, and His Excellency the Governor of the Central Bank. Commercialbank remains committed to maintaining the highest standards of service and value to our shareholders and for our customers and we owe much to the loyalty and dedication of our employees who have enabled us to manage the challenges the Bank has faced recently. I am optimistic that the Bank is well positioned to capture the growth opportunities in the years ahead.

Abdullah bin Khalifa Al Attiya
Chairman